Letter: How America is sliding towards a Banana Republic
From Donald Laghezza, Forest Hills, NY, US
I found it both apt and amusing that Ruchir Sharma solved his own puzzle “What went wrong with capitalism” (Weekend Essay, Life & Arts, May 25) in the first two sentences of his piece. For students of American history and economics on this side of the Atlantic, the short answer is: Ronald Reagan.
Reagan’s “fronting” of the neoliberal mumbo jumbo — branded and sold as trickle down economics — was the beginning of the end of the New Deal order set in place by Franklin D Roosevelt, the FDR who was declared in the 30s as the saviour of capitalism by men who should know.
There is a saying among management types here in the US that “s*** flows downhill”. It was quite a sales job Reagan pulled off — with an assist from your side of the Atlantic in the shape of Margaret Thatcher. Together they mesmerised people into thinking that it was wealth that would trickle down once it had been sucked up as income into the hands of a smaller and smaller group of men.
Even traditional Republicans like FDR’s great-uncle, Teddy Roosevelt, and Dwight Eisenhower knew that if you reduced the high tax rates on realised income, most or all of that money would never reappear in the national economy.
It would reappear as 300ft yachts and island retreats in the Cayman Islands. They understood it was necessary to plough much of the profits back into business and infrastructure, as expenses.
If one spends some time in Latin America, with your eyes open, you can see the result of an uncontrolled system of wealth siphoned up to a very few individuals. Nothing works: infrastructure, education and health systems are abysmal.
America’s slide towards a Banana Republic is in full swing. I see it every day in the crumbling bridges, roads, water, education and health systems. The lamented “big government” now exists primarily to enable wealth to legally move on, once a locale’s infrastructure and resources have been sucked dry.
Donald Laghezza
Forest Hills, NY, US
Forest Hills, NY, US
